On Saturday, Warren Buffett criticized stock trading platforms such as Robinhood, which allow buying and selling for free as a promotion of the “gambling impulse.”
“There’s nothing illegal, there’s nothing immoral, but I don’t think you’re building a society around the people who do it,” he told Berkshire Hathaway’s annual meeting, held in practice this year, because of the coronavirus, The Guardian reported.
Buffett complained that many novice stock traders treat the market like a “casino,”
He pointed out that in 1903 there were more than 2,000 automobile companies, and although motor vehicles revolutionized society, almost all companies disappeared, according to The Guardian.
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“There’s a lot more to choosing stocks than figuring out what an amazing industry it will be in the future,” he said. “I just want to tell you it’s not as easy as it sounds.”
He said owning an S&P 500 index fund is a better bet for most people.
Robinhood “has become a very important part of the casino aspect, the casino group that has joined the stock market in the last year or a year and a half,” he said, according to CNBC.
Buffett said that American corporations can be a good place for solid investment, but they also make great “gambling chips.”
“If you take care of these gambling chips when people first have money in their pocket and tell them they can make 30 or 40 or 50 deals a day and you don’t charge them any commission, you sell your orders or whatever. “Well, I hope we don’t have more than that,” CNBC reported.
The Robinhood app found itself in hot water earlier this year during GameStop, buying Rage.
The meeting in Berkshire is usually held in Omaha and may attract about 40,000 investors, but this year it was held in Los Angeles to accommodate Vice President Charlie Munger.
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Munger agreed with Buffett’s assessment of Robinhood. “I think it’s just awful god that something like this has brought investment from civilized men and respectable citizens,” he said, according to CNBC. “It’s deeply wrong. We don’t want to make our money by selling things that are harmful to people.”